BREAKING: Fed estimates 47 million job losses, 32% unemployment!

Just Another Hobby Jogger wrote:

voltage wrote:

A business is not a household. Rather than saving money they invest it back to expand and increase efficiency of operations.

Huh? When did they invest to expand and increase efficiency of operations? They used extra cash to buy back their own stocks to boost their share prices. (And the ones who made this decision made a lot of money through their stock options.)

They do both with their profits.

Invest some to grow and use some to buy back stocks.

In both cases they aren't building up cash.

Their incentives are revenue/profit based and shareholder based.

So they run the businesses to meet those goals for their bonuses.

Holding onto cash doesn't help any short term goals. If they put emergency savings into their bonus plans, they would have saved more.

We were going to have a recession in 2020 anyways. There was still too much over leveraging by individuals and company buy backs inflated the stock market. It will not go back to 2010 boom decade but it won't stay at 30% unemployment once some people get healthy. Here is the hardest question of the day. Do we need thousands or million of elderly to pass away to restore viability of pension funds, social security, etc? Just as working from home has reduced carbon emissions and helped the environment, are our current demographics sustainable economically without a correction like this? Yes I know it is a terrible question to ask but something bad was coming down the line economically regardless of the virus it's just a question of how long it will go.

It may seem difficult to imagine a good result now, but de-emphasizing purely monetary goals & focussing on teamwork, compassion, and solidarity has benefits that I hope would be obvious. Likewise, one can see how far we’ve gone in the opposite direction up to this point.

Portland Hobby Jogger wrote:This isn't Great Depression conditions or even the bad loans that precipitated the 2008/2009 financial crisis. This is a very artificial stop to economic activity.

Will some establishments never re-open? Yes. Did we have too many restaurants, hotels, retailers, and other frivolous ways to waste money? Of course.

You don't seem to understand either the Great Depression or the '08 financial crisis. The economy is a connected whole. If a single part of it takes a hit, it can ripple throughout countless industries. You didn't have to be connected to either housing or the financial sector to be hit very hard, for many years after 2008.

What we're potentially facing now is worse. If even a small percentage of small businesses collapse, then retail purchasing collapses, which kills more small businesses. Low wage earners will be the first to get hit, but it will spread throughout the economy. Biglaw associate pay cuts have already started.

And, incidentally, who are you to decide the right number of restaurants and hotels for the world? Asceticism is a great philosophy for an individual, but if a modern society abruptly pivots in that direction, the result is going to be an explosion in poverty and suffering.

You are such an alarmist. Most of that is employees temporarily out of work because they have been forcibly shut down by the local government. A lot of those people stand to make more in unemployment than they would working. Most of them will go right back to work once the quarantines are lifted. Right now is the ideal time to invest.

As far as small businesses are concerned, they are able to get 7a loans from the SBA (which ironically are only available through large banks). As long as the funds are used to pay their employees, mortgage, rent and utilities for 2.5 months, they are completely forgiven. The $2 trillion dollar stimulus means a lot of free money for a lot of people.

I interviewed six candidates for work yesterday. Three basically said they were not interested because they could make more in unemployment benefits for four months.

joedirt wrote:

Most of them will go right back to work once the quarantines are lifted.

I think that's overly optimistic. And it really depends on how long the quarantines are in effect.

Look at the post from 800 dude. That dude has it right.

Let's optimistically say quarantine ends June 1.

You can't change the fact that commerce had stopped for over two months. Any stimulus would not be equivalent to the lost income and production.

Millions of people will be hurting financially. They won't run out and immediately spend at the same level.

So, businesses will be shy about hiring.

You can't turn it all right back on.

All businesses are connected to each other. Saying "most" will go back to work still means less than 100%.

We run the economy trying to get at least 101% of the period before. At 90%, it's a big hit and it compounds, negatively.

I'd like to be wrong about that and hope we do go full speed immediately.

joedirt wrote:

I interviewed six candidates for work yesterday. Three basically said they were not interested because they could make more in unemployment benefits for four months.

All the dentists in my state are closed for everything except emergencies. Hard to believe you are interviewing and hiring.

My wife's a dentist. I am not. I am an engineer and I oversee construction projects. We are going full steam ahead right now as a lot of the facilities we work in are unoccupied(trades are still considered critical). The dental office is closed for now, but we were already scheduling months out before this happened. With all the patients she had to reschedule, she won't have many days off for quite some time. But her employees are drawing unemployment because that is what the legislation is telling them to do, and with partial pay from the state and another $600 a week from the Feds, they are making more than when they typically work. Plus they will be getting $1200 checks from the Feds (and $500 for each kid). We'll take the free 7a loan money from the Feds, because it would be stupid not to. As business owners we are taking a brief hit, but we are capable of sustaining one. Long term, people will travel again [people might drive more due to cheap gas, others will fly to take advantage of cheap fares (probably with a mask)], people will eat out (rich folks aren't suddenly going to start cooking their own meals), and life will get back to normal (just as it did after H1N1, just as it did after Sept. 11, and just as it has done after every other panic in the past). If you play your card right, you might just get some of the best deals of your life in this period of uncertainty.

joedirt wrote:

My wife's a dentist. I am not.

OK, I was going off of your prior post. I guess if you and your wife own the dental practice in common, I guess this is a common enough way of speaking. I thought the "my dental office building" implied you were a dentist:

joedirt

1 year ago 01/10/2019 5:54am CST re: pesky facts

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Had my dental office building broken into for the third time in the past four years at 4 this morning. That is reason enough for me. Property crimes in Colorado have gone up dramatically since weed was legalized. Despite going down elsewhere.

I do own the building.

The economic consequences of a relatively short but severe shutdown that controls and contains the virus are nothing compare to the consequences of isolating the "at risk" people and letting everyone else go back to work. There are lots of people who fit in the at risk group who are very active in the economy. There are about 25 million diabetics in the US and a few million with moderate to severe asthma. About 15% of the US workforce is 60+. So, keeping the at risk population quarantined is not too far off from the levels of unemployment that will be sustained during a lockdown, except that it would be sustained until a vaccine is available.

The current economic consequences can be controlled through government intervention and legislation. The 1933 Banking Act and FIRREA are examples of how legislation can step in to keep economic systems from eating their young in the midst of a crisis. There will inevitably have to be a similar approach to resolving the massive number of defaults due to the virus shutdown.

Bankrupt Trump wrote:

uneven wrote:

With all the business and personal bankruptcies Trump will have to declare a natural disaster type relief package for the entire country. The natural disaster industry is probably preparing already.

Trump is actually an expert at bankrupting businesses.

+1, You're Fired!!!!!!!!!

Everyone listen to Mr. World Peace, who should be posting under the screen name kumbaya

To keep everything intact would mean for the U.S. gov't to serve as payer of last resort for businesses, including salaries at 80% plus universal COVID care, on the condition that jobs do not disappear, which is essentially what they're doing in Europe, with the exception of COVID care, where they already have universal health care. In the U.S. the jobs are going away and many of them and the businesses supporting them may never come back. Time to replace the plan to pay unemployment with a plan to pay for jobs to be retained but the federal gov't paying the salaries until the pandemic is under control.

zxcvzcxv wrote:

To keep everything intact would mean for the U.S. gov't to serve as payer of last resort for businesses, including salaries at 80% plus universal COVID care, on the condition that jobs do not disappear, which is essentially what they're doing in Europe, with the exception of COVID care, where they already have universal health care. In the U.S. the jobs are going away and many of them and the businesses supporting them may never come back. Time to replace the plan to pay unemployment with a plan to pay for jobs to be retained but the federal gov't paying the salaries until the pandemic is under control.

Great idea! You must have served in the Carter administration, smh....

joedirt wrote:

You are such an alarmist. Most of that is employees temporarily out of work because they have been forcibly shut down by the local government. A lot of those people stand to make more in unemployment than they would working. Most of them will go right back to work once the quarantines are lifted. Right now is the ideal time to invest.

I'm a permabull on the markets (mostly because if it crashes and burns, we'll have bigger problems than me not having a job), but I am concerned that the gov. has proven they are willing to shut down for long enough that jobs may take a long time to recover. For example, locally owned businesses (gyms, hair salons, restaurants, etc.) have leases and ongoing operational costs with $0 revenue. If those entities become insolvent, it's not like new capital is going to flood in to replace them the day we open back up. Their employees may very well not have jobs to come back to. Couple that with the secondary effect (which the Fed seems willing to correct at all costs) of banks losing on loans to those businesses, and you could wind up in a financial crisis as well. Either of those things would take time to readjust and rebuild.

That being said, I am using new capital to invest - I am a permabull after all. I just suspect this may not be a V recovery unless they reopen things very soon AND the virus doesn't kill us all when they do.

If they take the free money the government is printing (yes, they are printing money, which means if you are in cash you will be losing, because the risk of printing money is inflation) they can pay payroll, rent / mortgage and utilities for 2-1/2 months. If their employees are unemployed, a lot can make more in unemployment for up to 4 months than when they were working. If a person is not invested in securities, the money they are holding will be worth far less. Inevitably, there will probably be a second round of stimulus money as well. All the free money they will put into the system will end up pushing stocks far higher in the future. Plus, it's not like this virus is taking out the most productive members of society. It is mostly taking out old and fat people.